Urban Ladder wants to convert into a single brand retailer

Image for representation only. Credit: ThinkstockOnline furniture marketplace Urban Ladder has filed an application with the government to convert into a single brand retailer so that it can stock products and sell them directly to consumers and still retain its foreign investments, two people aware of the development said.

The move makes Urban Ladder the first foreign-funded ecommerce marketplace to capitalise on new regulations that allow foreign-funded single brand companies to sell directly through online portals provided they also have brick-and-mortar stores.

Urban Ladder Home Décor Solutions has sought approval of the department of industrial policy and promotion (DIPP) “to undertake single brand retail trading under the brand name Urban Ladder” in an application filed on September 5, the sources said.

Rajiv Srivatsa, founder of the Bengaluru-based furniture marketplace, declined comment on the DIPP application. At present Urban Ladder does not sell directly to consumers because foreign-funded marketplace operators can only offer a technological platform for retailers to sell their products but cannot sell any products on their own.

By becoming a single brand entity, it can buy goods, hold them in its own warehouses, and also sell them to consumers. The firm has so far raised around $77 million in four rounds of funding from mostly foreign investors including SAIF Partners, Kalaari Capital, Sequoia and Steadview. Ratan Tata is also an investor in the firm.

In its application to DIPP, Urban Ladder said it will set up physical stores to comply with single brand rules. The first such store will cope up within Urban Ladder’s office complex in Bengaluru, said the people quoted earlier.

In November, India amended its single brand retail FDI policy and announced a unified licence for foreign-funded companies that sell products under mono labels for both offline and online retail, thus allowing such firms to do their own inventory-led ecommerce business in the country Earlier, even though 100% overseas capital was allowed in single brand retailing but they were restricted to sell only through physical outlets and not through online portals.

India also allows 100% foreign investment in e-commerce marketplaces but such models are not allowed to stock and sell merchandises.

Single brand is the only form of ecommerce where companies can now hold and sell their own stocks, prompting many online retailers to look at this option so that they can do inventory-led ecommerce business that India otherwise bars.

ET had on August 31reported that various online firms including Urban Ladder and garment retailers Zivame, FabAlley and Yepme, consider turning into single-brand retailers so that they can sell directly to consumers without foregoing foreign investments. Zivame, that currently sells around 50 brands of lingerie products, plans to sell only Zivame label in its single brand avatar.

Women's fashion portal FabAlley, which sells products under FabAlley brand, plans to turn single-brand retailer next year when the company plans to raise overseas capital, its cofounder Shivani Poddar said. The Bengaluru-based firm is currently funded by Indian angel investors and the company is expected to raise foreign capital next year.

The government has, however, clarified that companies seeking single brand licence must run brick-and-mortar stores and cannot sidestep physical outlets to sell online. Zivame and FabAlley already runs brick-and-mortar stores.